Cutting Costs Out Of Supply Chain Still Top Strategy

July 13, 2007
Companies aren't implementing service-enhanced strategies.

What companies say they want to do seems at odds with what they are really doing, according to a study by Manufacturing Insights, an IDC Company. While 71% of survey respondents cited increased quality and customer satisfaction as their top business objective, when it comes to supply chain strategy almost half (48%) are still trying to cut costs out of their supply chain. They cite reducing material, manufacturing and logistic costs as their top supply chain strategies.

"As a whole, it does appear that manufacturing firms surveyed are still looking at a cost strategy in their supply chains, as opposed to speed, flexibility, or service-enhanced supply chain strategies," said Kimberly Knickle, program director and lead analyst on the survey.

The second and third supply chain strategies cited were more responsive and timely decision-making across the global supply chain (39%) and more responsiveness to changes in the marketplace (36%).

Other business objectives include reducing overall cost and improving productivity (66%), and increasing revenues and exploiting new markets (62%).

When asked to identify "the most important IT investment areas in terms of their impact on global supply chain performance over the next two years," the top three answers most often cited by respondents were advanced supply network planning or manufacturing scheduling, advanced inventory management or optimization, and supply chain execution, logistics control and management.

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